UPDATE: Telecom Italia Core Shareholders Renew Pact -Reports
October 17 2009 - 11:39AM
Dow Jones News
Telecom Italia SpA's (TIT.MI) core shareholders are considering
a bond issue to pay off more than EUR2 billion of debt after
agreeing to renew their pact for three years, according to Italian
news reports Saturday.
The idea of a bond would replace an earlier one for a capital
increase to pay back EUR2.6 billion of debt owned by Telco, the
holding company through which the five shareholders control a 24.5%
stake in Telecom Italia, Corriere della Sera newspaper said.
The bond would be for institutional, rather than retail,
investors, it said without naming its sources.
A mandate for the bond issue had yet to be made because not all
of the shareholders had been fully consulted, it said.
The idea would be discussed at the shareholders' next meeting,
it added.
The shareholders also agreed to renew their pact for three more
years, both Corriere and Il Sole 24 Ore, a business daily,
reported.
The agreement would end speculation about the fate of Telefonica
SA (TEF.MC) as the biggest single shareholder in the Italian
telecommunications giant.
After intense talks held this week, Telefonica and the four
other core shareholders agreed to renew their pact when it expires
in April 2010.
The shareholders were to come to an agreement by Oct. 28.
Insurer Assicurazioni Generali SpA (G.MI), bank Intesa Sanpaolo
(ISP.MI), merchant bank Mediobanca SpA (MB.MI) and the Benetton
family are the other four shareholders.
One of the conditions to the pact's renewal would be to grant
shareholders the right to leave the pact after 18 months of its
renewal, Il Sole 24 Ore said.
Through Telco, Telefonica has a 10% indirect stake in Telecom
Italia.
Recent news reports had spoken about the shareholders being
dissatisfied with Telecom Italia's performance and accusing
Telefonica for doing nothing about it.
Italian politicians had also raised fears about a foreign
company having control over the country's fixed-line network run by
Telecom Italia because they considered it a strategic asset.
Telefonica has repeatedly said its stake in Telecom Italia is
part of a long-term industrial alliance.
-Gilles Castonguay, Dow Jones Newswires; +39 02 5821-9908;
gilles.castonguay@dowjones.com